Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.

“The new option allows
qualified taxpayers to deduct annually $5 per square foot of home office space
on up to 300 square feet, for as much as $1,500 in deductions.To take advantage of the new option,
taxpayers will complete a much simpler version of the current 43-line form.

The new
option for the home office deduction will be available starting with the Tax
Year 2013 return, which most taxpayers file early in 2014.

Current
restrictions on claiming the home office deduction, such as the requirement
that a home office be used regularly and exclusively for business and the limit
on the amount of the deduction tied to income derived from the particular
business, still apply under the new option.”

I looked
at all of my clients who filed this form, and the simplified procedure would
have cost every one of them money. Perhaps that’s because of my client base,
but I don’t think so. Most taxpayers taking the home office deduction do keep
good records, so the recordkeeping isn’t that big of a deal. After all, these
are small business owners who have to keep good records anyway (or are supposed
to). The reality is that $5 per square foot understates the cost of most home
offices, especially when factoring in depreciation.

Simple in this case does not necessarily mean better.

As this is an option, taxpayers who qualify for a home office
deduction in 2013 should calculate the deduction using both actual expenses and
the optional method and choose the option that provides the bigger deduction.

One question – how will using the standard deduction option
affect the Schedule A deduction for real estate taxes and mortgage interest
(since these items are a component of the home office deduction)?

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(1) Before contacting me with questions about how a blog post relates to your specific situation, please be aware that I do not give free tax advice to non-clients by e-mail, comment response, or phone. So don't waste your time and mine.

(2) I am winding down my tax practice, and I will not, under any circumstances, accept any new clients. Period. I am actually trying to "thin the herd".